Startup business loans can be a roadblock for women in pursuit of entrepreneurship goals. Many women-run businesses are shutting shop only because they don’t have access to additional capital to run their business. Even when they manage to get loans, they are not clear about the fine print, repayment system, interest rates, and whether or not it is really useful for their business. In this article, we’ve collated a list of things women need to be aware of before applying for a business loan.
Loans without any collateral
This kind of loan is a great opportunity for women entrepreneurs who are starting or expanding their micro, small or medium enterprises. Women are eligible for loans of up to ₹1 crore without providing any processing fees, collaterals or guarantees. However the loan should be repaid within seven years and the owner of the business should hold 51% or more share capital in the company, either individually or jointly.
Loans for self-employed women
This kind of loan is offered to self-employed women. Doctors, chartered accountants, engineers, architects and other professionals who are self-employed are eligible for this loan, irrespective of owning a business. The loan amount starts from ₹10 lakh and goes up to ₹5 crores, with a varying interest rate, depending on the duration of the loan.
Business loans for women of rural India
Various banks have started providing loans to women in rural areas to encourage them towards entrepreneurship. If a woman in a rural area has a food catering business, she can avail a loan of ₹50,000 by putting up a guarantor, and the assets of the business as collateral. The loan, however, should be repaid within three years. Similarly, women can avail a soft loan of up to ₹1 lakh to meet the requirements of agricultural and non-farm activities. Banks like IDFC also provide loans to self-help groups for women to enhance their livelihood in the form of Sakhi Shakti loans.
Increase company credit score with a consolidated loan
This is by far the most crucial thing a woman should know when applying for a business loan. Setting up or expanding a business is expensive, and can lead to various debts. Different loans at different interest rates can mess up your company’s account book. Therefore, there are options where one can avail a single personal loan to close all the existing ones. This hassle-free option also increases’s the company’s credit score.
Besides the points mentioned above, some other things to note are - check various government schemes and subsidies which are specially designed for women entrepreneurs. These schemes provide loans under various categories. Schemes such as the Mahila Uddyami scheme assists with availing loans easily. Government loans such as The Micro Unit Development and Refinance Agency, and Credit Guarantee Funds Trust for Micro and Small Enterprises offer credit reliefs that cover a portion of the loan amount. Check for loan eligibility for upgrading technology used by your MSME business. Various other government initiatives such as the Training and Employment Programme for Women (STEP), Pradhan Mantri Kaushal Vikas Yojna (PMKVY), Jan Dhan Yojana (JDY), Bhartiya Mahila Business Loan, and Cent Kalyani scheme also encourage women’s participation in economic development.
(Edited by Anju Narayanan)